On July 24, 2008, the House passed H.Res. 1368, which suspends, for the remainder of this Congress, a provision in current law that would require the House to vote on a bill that meets the requirements of the “Medicare 45 percent trigger,” which was enacted by a Republican Congress in 2003. This “Medicare 45 percent trigger” is not a meaningful measure of Medicare’s fiscal health; instead, it is designed to set off a false alarm and advance the Republican agenda to dismantle Medicare. Furthermore, it so happens that the Democratic-led Congress recently enacted the Medicare Improvements for Patients and Providers Act (MIPPA) over the President’s veto which satisfies the 45 percent trigger – moving the trigger’s impact back one year, just as the President’s bill does. There are only technical reasons why the MIPPA did not turn off the trigger for this year.
Background
In 2003, at the last minute, a provision was slipped into the conference report on the GOP-drafted Medicare Modernization Act (MMA) that created a new “measure” of Medicare’s financial health – the so-called “45 percent trigger”. However, rather than being a meaningful measure of Medicare’s fiscal status, this trigger is designed to set off a false alarm and advance the Republican agenda to dismantle Medicare.
Reports of Medicare’s death have been greatly exaggerated. Though the trigger was technically pulled by the 2007 Medicare Trustees Report, that report actually showed that Medicare remains solvent and sustainable. The trigger is an arbitrary threshold designed to scare people into thinking that we can’t afford to continue to provide care through Medicare.
Over the years, Democrats have always worked to keep Medicare financially healthy and sustainable. For example, under the Clinton Administration, the solvency of the Medicare Trust Fund was strengthened – lengthening its solvency from six years to 25 years. Democrats will continually work to improve the solvency and strength of the Medicare program.
Under the GOP trigger provision, if general revenues are projected to exceed 45 percent of overall Medicare spending within a seven-year window in two consecutive Medicare Trustees reports, the President is required to submit legislation to make Medicare changes in order to move general revenues back under the threshold. Under the GOP provision, there are also expedited House procedures for consideration of a bill that meets the threshold by cutting benefits, cutting provider payments, shifting costs of beneficiaries, or raising payroll taxes.
The “45 percent trigger” is a completely arbitrary measure. The Medicare program was designed to be substantially financed by general revenues rather than payroll taxes. The fact that a sizable portion of Medicare’s financing comes from general revenues is no more problematic than the fact that 100 percent of the defense budget comes from general revenues.
Furthermore, it happens that the reforms in Medicare included in the Medicare Improvements for Patients and Providers Act (MIPPA), which the Democratic-led Congress just enacted over the President’s veto satisfy the 45 percent trigger test this year. It is only for failing to comply with certain technical requirements of the trigger provision (such as the name of the statute) that enactment of MIPPA didn’t turn off the trigger for this year. Hence, this provides another reason why it makes sense to suspend the Medicare trigger for the remainder of this Congress.
Following is an overview of how the 45 percent trigger works and why this rule to suspend the trigger for the remainder of this Congress is reasonable and important.
45 percent trigger was slipped into the GOP-drafted Medicare Modernization Act (MMA) at the last minute in 2003. In 2003, at the last minute, a provision was slipped into the conference report on the GOP-drafted Medicare Modernization Act (MMA) that created a new measure of Medicare’s financial health – the “45 percent trigger.”
The MMA defined what the 45 percent trigger was and, when it was triggered, required “Medicare Funding Warnings” and presidential legislation. Under the MMA provision, if general revenues are projected to exceed 45 percent of overall Medicare spending within a seven-year window – and this finding occurs in two consecutive Trustees’ reports, then a “Medicare Funding Warning” is issued. Once a “Medicare Funding Warning” is issued the President must propose legislation in his next budget to move general revenues back under the threshold. Congress must then consider legislation to cut benefits, cut provider payments, cost-shift to beneficiaries, or raise payroll taxes on an expedited timetable.
The 45 percent trigger is completely arbitrary and is not a sound measure of Medicare’s fiscal health. The Medicare program was designed to be substantially financed by general revenues rather than payroll taxes. The fact that a sizable portion of Medicare’s financing comes from general revenues is no more problematic than the fact that 100 percent of the defense budget comes from general revenues. Furthermore, no explanation has ever been provided as to why 45 percent is the “right” amount of general revenue financing for Medicare. Indeed, the Chief Medicare Actuary has testified before Congress that there is no technical rationale for the trigger threshold.
The 45 percent trigger was triggered by two consecutive Trustees Reports in 2007. The 2006 and 2007 Medicare Trustees Reports projected that general revenues would exceed 45 percent within their respective seven-year windows. As a result, earlier this year, the President proposed legislation that would move general revenues under the threshold.
The President’s proposed bill hits beneficiaries, rather than scaling back the overpayments to private Medicare Advantage plans. Under the requirements of the MMA, on February 25, Majority Leader Hoyer and Minority Leader Boehner introduced the President’s legislation (H.R. 5480), which he had submitted to meet the Medicare 45 percent trigger requirements. The President’s legislation shifts more of the burden of Medicare to beneficiaries in the form of higher cost-sharing, rather than cutting the excessive overpayments that are going to private Medicare Advantage plans.
Unlike the President’s flawed bill, the Democratic-led Congress has just enacted a law that satisfies the 45 percent trigger, while protecting beneficiaries. On July 15, over the President’s veto, the Democratic-led Congress just enacted the Medicare Improvements for Patients and Providers Act (MIPPA). It so happens that this key law satisfies the 45 percent trigger – moving the trigger’s impact back one year, just as the President’s bill does. Unlike the President’s flawed bill, the MIPPA strengthens Medicare by cutting excessive payments to private Medicare Advantage plans while protecting beneficiaries. It is only for failing to comply with some of the technical requirements of the 45 percent trigger provision (such as the name of the statute) that MIPPA’s enactment did not remove the “trigger” requirement for this year. Hence, this provides yet another reason why it makes sense to suspend the Medicare trigger for the remainder of this Congress.
Furthermore, the Democratic-led Congress is committed to keeping Medicare strong and solvent well into the future. Democrats are determined to keep Medicare financially healthy and strong. Through the years, Democrats have repeatedly taken steps to strengthen Medicare’s solvency and ensure its long-term viability. For example, under the Clinton Administration, the solvency of the Medicare Trust Fund was lengthened from six years to 25 years. Similarly, the Democratic-led Congress over the next several years will continue to work to strengthen Medicare’s solvency. In continuing to fight for the financial health of Medicare, the 45 percent trigger provision will not be a relevant measure or a useful tool.
